EBA Weighs in on Services Directive

18 April 2005

The European Lotteries, the toto companies and those organizations licensed to operate games of chance for public benefit, organized a high-level conference last month in Brussels, on the impact of the European Commission's forthcoming Directive on Services (SD) in the internal E.U. market.

IGN recently caught up with two members of the European Betting Association--Secretary General Didier Dewyn and Torbjörn Ihre, who oversees external affairs--to get their views on the conference and the future of E.U. policy as it relates to cross-border gambling.

IGN: Will the reforms proposed by the Services Directive lead to a dangerous deregulation of the European gambling sector?

Didier Dewyn: The current draft will certainly not lead to a dangerous deregulation. There is a temporary but indeterminate derogation for gambling until the EC would come up with a harmonization proposal. Of course EBA would like to go further than this and include betting (versus gambling, such as casino games) without any derogation under the "country-of-origin principle" This would mean that every betting operator would be allowed to market its services to other countries under the license conditions of his home country; if you look at the current E.U. jurisdictions licensing betting for private operators, one will see that all are very well regulated (the U.K., Malta, Gibraltar, etc.). We see no fear that there would be excesses.

IGN: Will liberalization lead to more of problem gambling, crime and fraud and would it result in an overheating of the market in Europe?

DD: We do not think so. If the U.K. was deregulated with more turnover, would that bring more problem gambling? This accounts also for crime and fraud. There is no evidence whatsoever that remote gaming could be associated with these issues. On the contrary, the only scandals known to us are those coming from the land-based gaming industry, e.g. Holland Casino (money laundering), Belgian casino's recently in tax fraud scandal, etc.* Remote gaming operators are capable of perfectly monitoring and tracking customers, and likewise with the financial flows which goes always via bank, so no there's cash involved.

IGN: Will a restrictive gaming policy provide a better control of the market?

DD: The national monopolies have had decades to adapt to a restrictive gaming policy, but we know from all statistics that they only have used their monopoly not to restrict and control gaming, but to expand their income. So it's time that the private operators can prove that they provide better quality to the public, even when it comes to customer protection (e.g. against problem gambling). All EBA members have adopted the Code of Conduct, and EBA is currently in the phase of cooperating with social responsibility specialists to implement self regulation. We haven't seen very much yet in this field from the monopolies.

IGN: Do you see very good reasons to grant gambling services a special status in relation to the European single market?

DD: No, gambling is not a public service, but a commercial service, although there may be reasons to pay attention to social responsibility issues, and this accounts also for fraud, money laundering, etc. These problems can all be overcome by proper regulation, and EBA is prepared to talk to regulators. Nationally and in the E.U. environment, we can tackle these issues on the condition that these equally apply for both private and state-run operators.

IGN: Would gambling be removed from the scope of the Services Directive?

DD: No, this would only create a "drain" from current E.U.-licensed operators being forced to move offshore outside the E.U. without solving the problems. Customers will continue to play, however, without the protection the E.U. licenses currently provide. Tax income would also suffer from such removal.

IGN: Do you think that the dossier of the Directive on Services goes in the wrong direction?

DD: The EC is doing a good job trying to implement on the field what the EC Treaty (Article 49) actually states in terms of freedom of provision of services. It is the national states who are obstructing this basic principle of the E.U. by giving higher priority to national income. This cannot be the right way forward

IGN: Did you see the ARGO press release, "Publication of Fair, Honest and Safe"?

DD: Yes, we fully support this publication. We cooperate with them. As EBA is dealing exclusively with E.U.-related gaming issues, we cooperate in the field of E.U. affairs. ARGO is predominantly U.K.-focused in terms of members and EBA is the only true E.U. association with an E.U. agenda. There is certainly room for two or more associations, as this will only reinforce our action points.

IGN: What is the next on the road to the Services Directive?

Torbjörn Ihre: Mrs. Evelyn Gebhardt, the rapporteur for the Service Directive and a member of IMCO (European Parliament committee for the Internal Market and Consumer Protection), at the IMCO meeting on April 19 will submit her first part of her report, which is a list of suggested amendments to the Service Directive she has put together. The amendments in this first part of the report will cover the scope of the directive and the country-of-origin principle. It is possible that this scope will indicate whether gambling is out or will remain in the proposed directive.

Please note that it is only after that the full EP (European Parliament) has voted on amendments that you have for certain the EP position on all aspects of the proposed directive. That vote on "the first reading" might take place only after the EP is back after summer holidays.

It should be stated that the Service Directive never mentions deregulation or liberalization of the gambling market. The SD mentions harmonization. The spirit of the SD is also to allow for cross-border offerings of services. The EBA has never claimed that the market should be deregulated, but it should be open to competition based on the country-of-origin principle.

IGN: How will I-gaming regulations in the United Kingdom impact E.U. policy?

TI: If I focus on the implications for the E.U., my immediate reaction would be that they will be limited--one reason being that the U.K. government is not going to promote their legislation as a role model for the rest of the E.U..

An additional reason is that the other E.U. states' prime concern is to protect their incomes from the gambling monopolies, and they consider any competition as a real threat to that. They might even consider the new U.K. legislation as threat in itself, as it does not prevent betting operators licensed in the U.K. to offer their services on a cross-border bases to customers in other member states.

My personal opinion is that the E.U. should just take the U.K. legislation as a role model and prove that also a competitive gambling market can and is protecting public order and consumer interests and on top of that offers tax revenues.

About the EBA

The European Betting Association is mainly a lobby group set up to mobilize support for an undistorted application of the EC treaty for a liberalized internal betting market.
Members consist of established and licensed organizations active in major European markets. Key members include Expekt, MrBookmaker, Unibet, Intertops, Betandwin, Interwetten, Globet, Betfair, Wettenleip, Digibet, Bet365, Digibet, Primebet and Sportingbet.

*The Observer reported April 12 that Napoleons Casino in Leicester Square, London is under investigation following allegations that Chinese gansters are using the venue to "launder vast sums of illicit cash from extortion, vice and people smuggling operations."

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.